For those that have basements in their home, they can present the ideal location for a home theater. After all, they are often unfinished, so you have a blank canvas with which to work, they are seperated from the rest of the home so you can have the volume turned up without bothering the rest of the household, etc. That being said, there are also many things to consider before making the investment: there are usually few, if any door and windows for emergency escape and there is a possibility it could flood.
Ryan Herd of 1 Sound Choice covered many of these issues when he was designing and building a home theater for New Jersey clients. To address any problems due to poor grading on the exterior of the house, install a sump pump (make sure it can be quickly and easily accessed in the event of a flood) and seal the concrete walls and floor with Drylok masonry paint for added protection. Herd chose to install acoustical panels for sound proofing and created a larger acoustical panel on the wall that is removable to uncover a window that can be used as a fire escape. Lastly, as a final precaution, Herd suggests installing water sensors to alert homeowners the second moisture is detected.